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Utility rate increases discussed at Fredonia Public Hearing

A public hearing was held last week to discuss possible rate changes to bulk water and electricity. The meeting, which had been posted for 60 days prior, had very few residents in attendance.

The meeting began with a discussion regarding the bulk water rates. Office employee Kelly Hilding explained that with the new prepaid card system on the culinary bulk water, it is no longer feasible to charge the $16.50 per month used to bulk water customers. She stated, on average, the $16.50 fee generates approximately $100 per month revenue for the town.

Hilding suggested, if the council would like to continue to implement a fee like that, they make it a recharging fee for the card, possibly $5 to fill the pre-paid card. This way the customer could choose if they wanted to put more money on the card at one time to pay the fee less often. As this was only a public hearing, no decisions could be made. The subject will be on the next regular meeting agenda on June 28.

Power rates were next on the agenda. This included demand rates and standard power rates. Town Manager Dan Watson explained there are a few factors creating the need to address the power rates. Watson said Richard Darnell of URS recently conducted a utility audit, determining the cost of power the town is purchasing is going up and approximately 10% of the power poles for the town need to be replaced. Darnell also expressed the need for the town to establish a maintenance fund for the power company to pay for tree trimming and general maintenance, as well as large purchases such as the transformer.

In order to pay for these things, Darnell suggests the town’s power rate structure be changed. Currently, residential customers pay $5, and general customers pay a $10 minimum for electricity. This is paid only if the customer does not use $5/$10 worth of electricity for that month. Otherwise, the customer pays only for usage.

Darnell suggests the minimum fee be made into a base rate with an additional $2.50 added on. This would mean residential customers would pay $7.50 plus usage and general customers would pay $12.50 plus usage.

Councilmember Alvin Johnson said he would like to see actual budget numbers before making a decision.

Watson read a breakdown of the current electrical fund budget.

Resident and former Town Clerk Marilyn Johnson informed the council that the bonds for the purchase of the power company were paid off approximately 25 years ago. At that time, Fredonia Utilities lowered electricity rates for the town. Rates have not been changed since that time.

Alvin Johnson asked if the increase was implemented, would the town also have to follow through with the demand rate charges. “I think that is so crooked,” Johnson said about the demand rate.

Hilding explained that because the demand rate was supposed to have been charged at least as far back as 1999, Darnell included the approximately $60,000 per year that should be collected, per town code, in his suggested changes to electrical income. She shared the demand rates from Garkane, Page, St. George and APS to give an idea of what other companies do.

Councilmember Jennifer Lukus said although she does not necessarily support the charge, it is similar to the extra tax placed on semi-trucks because they are harder on the road; those customers who put a higher demand on the system are generally charged accordingly.

Johnson reiterated his opposition to charging the demand rate, stating the commercial customers have a hard enough time dealing with the tax base here. He feels charging the demand would drive out many businesses.

Watson said the office has been looking into the tax rates, in hopes of making changes that will positively impact the businesses in the community. The issue had been on the last meeting agenda, but the council tabled it.

The issue at hand, however, is that the demand charge is part of the town code. The council needs to choose whether to change the code, or begin charging the demand as written. A decision regarding utility rates will be made at the next regular council meeting, as well.